How Short-Time Compensation Keeps Americans on the Job

It’s been almost four years since President Obama signed the Middle Class Tax Relief and Job Creation Act of 2012. Among many other benefits, this law advanced the first substantial set of reforms to the Unemployment Insurance system in nearly 40 years, with an emphasis on re-employment. One of the key reforms was federal support for expanding short-time compensation programs, also known as “work sharing” or “shared work.” STC allows employers to reduce employee work hours to reflect decreases in business demand without laying them off, while providing partial unemployment benefits to workers whose hours are cut. This keeps workers on the job with a sustainable income and prevents job loss during economic downturns. It also lets employers retain skilled workers and avoid the costs of recruiting, hiring and training new employees when business demand increases. So are these programs truly effective? The Labor Department has released a research report from IMPAQ International on employers’ experiences and awareness that finds most view STC as a win-win solution for their companies and employees. The study collected survey data from over 2,000 employers across four states with active STC programs: Kansas, Minnesota, Rhode Island and Washington. Employers who participated in the study said that they applied for STC because they faced economic hardships, wanted to retain valued employees, and wanted to maintain the morale and health benefits of their employees. A few highlights:

The employers indicated that retaining employees saves on hiring and training costs.

In all four study states, more than 80 percent said that they would be either “somewhat likely” or “very likely” to apply for the program again in the future.

Between 86 and 99 percent of employers in the four states indicated that their employees’ reaction to STC was favorable or very favorable.

One employer participated in an STC summit hosted by the department in November 2015 said her Rhode Island textile mill company would not have survived the recession without the STC program and the ability to retain a skilled workforce. As for her workers, they were able to avoid the hardships of full unemployment and continue to earn a portion of their regular wages, while at the same time collecting some unemployment benefits to replace a portion of their lost wages. We estimate that STC programs have saved more than 570,000 jobs since the Great Recession. The results are in: STC works for both employers and employees. Learn more about short-time compensation programs at https://stc.workforcegps.org/.Gay M. Gilbert is the administrator of the Office of Unemployment Insurance for the Labor Department's Employment and Training Administration.

Comments

Tiffany Koebel (not verified) says:

Tuesday, August 30, 2016 - 11:42

Hi Jere,
Our Veterans’ Employment and Training Service (VETS) provides resources, expertise and training to assist veterans in locating and obtaining meaningful careers at over 2,500 American Job Centers nationwide. They can start by visiting www.veterans.gov or by calling 1-877-872-5627.

Sunday, August 28, 2016 - 08:53

I am a retired, unemployed Veteran. It appaers that all articles are geared towards immigrants, and the Vets are left out. When are you going to focus on hiring Vets?

Cecilia Mendoza (not verified) says:

Tuesday, September 6, 2016 - 00:50

Working together to maintain employees who have been in a company for a long time as opposed to laid them off is a motivating alternative. It not only increases the workforce morale but improves productivity.

SDVeteran (not verified) says:

Friday, August 26, 2016 - 16:42

Part time work

Another colossal waste of taxpayer’s money - clear and simple. Common sense ALERT: Did you know that during the Depression (1930s) that W.K. Kellogg created the six-hour workday in his factories so as not to lay off people. He simply made the decision and that was that. People didn’t lose their jobs, things improved in the community, and the story essentially has been untold.

Now, the government with tens of millions of our tax dollars decides to create some program that supposedly will help people transition from full-time to part-time! Wow that’s really difficult… NOT! And do you know why there are more part-time positions? Let me suggest that there are few reasons:

•US one of the highest tax rates for corporations
•Onerous laws, including new, and new-to-come DOL/Obama new overtime rules
•New pay controls for all positions in the US (DOL states it’s for minimum wage, but when you increase minimum wage… ALL OTHER WAGES MUST GO UP!) That’s called socialism – when the government controls wages (or perhaps it’s like a national union).
•Paid leave programs that WILL suck away jobs
•Obamacare… all evidence is in. Not only is this a financially failed program (most are not even aware of the risk corridors / slush fund set up by Obama for insurance companies… which by the way are coming to end. That means, very steep increases in premiums are coming just at the time he is exiting office! Perfect timing they say!

I could go on, but what’s the use. The government has run past the sensible spending and continues to rack up wasteful programs like this part-time transition program.

WA State Employer (not verified) says:

Friday, August 26, 2016 - 23:24

Our company experienced a time of economic downturn in WA state in 2001. We used the 'Shared Work' benefit thru Employment Security, allowing unemployment benefits for hours reduced. This allowed full worker retention (40 workers). By 2002 we were back up to full employment hours and we credit 'Shared Work' for the critical resource available thru the state's Employment Security to small business.